Fundamental Analysis is the primary method of analysis used in by "Value Investors." Fundamental Analysts examine an array of information to ultimately determine whether a stock should be bought, held, or sold.
Information examined by Fundamental Analysts includes financial health of a company (including the strength of the management team), macro and micro economic factors that may have an impact on a companies value, and other qualitative and quantitative factors that will help determine the Analysts opinion on a given company. Common fundamental figures used in Fundamental Analysis are Price to Earnings Ratio (P/E Ratio), Forward P/E Ratio, Trailing P/E Ratio, Price to Book, Gross and Net Profit Margins, Revenue, Beta, Market Capitalization, and many others.
A Fundamental Analysts uses these tidbits of information in an attempt to measure the intrinsic value of a company. If the intrinsic value they determine exceeds what the current stock price reflects, the stock is determined to be a buy. If the outcome is the opposite, the stock is determined to be a sell.
This method of security analysis is considered to be the opposite of technical analysis. It is not uncommon to hear Fundamental Analysts talking unfavorably about Technical Analysis, and the same can be said about Technical Analysts comments regarding the fundamental approach. In the end, both are valuable tools, and a blend of these two methods of analysis will likely result in a successful trading career.
Lastly, Fundamental Analysis is about using financial and economic data to evaluate a security's value. Although most analysts use fundamental analysis to value stocks, this method of valuation can be used for just about any type of security.